Petition for Writ of Certiorari — General Motors Corp. v. Thomas

1

Office-Suorome Court, US.

FILED

os oe J

o4- 49983 © JAN 7 1985

| a.

—_—_————————————————

In THE |

Supreme Court of the Anited States

OcTOBER TERM, 1984

GENERAL Motors CORPORATION,

Petitioner,

Vv.

LEE M. THomas, ACTING ADMINISTRATOR,

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

William L. Weber, Jr. Theodore Souris

George F. Ball James A. Smith

Thomas L. Arnett Terrence B. Larkin

GENERAL Motors Robert M. Spence

CORPORATION BopMAN, LONGLEY &

3044 West Grand Blvd. DAHLING

Detroit, Michigan 48202 Ath Floor

(313) 556-4009 100 Renaissance Center

Detroit, Michigan 48243

(313) 259-7777

Edward W. Warren

(Counsel of Record)

David G. Norrell

Attorneys for Petitioner KIRKLAND & ELLIs

General Motors 655 Fifteenth Street, N.W.

Corporation Washington, D.C. 20005

January 7, 1985 (202) 879-5018

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

, pl?

QUESTIONS PRESENTED

1. Did the Court of Appeals err in applying the interpretative

rule exception from the notice and comment procedures of

the Administrative Procedure Act and the Clean Air Act to

uphold a regulation that implements an agency’s substan-

tive policy determinations and has a substantial impact on

regulated parties?

. In reviewing a regulation treated as “interpretative,” did

the Court of Appeals err by applying the highly deferential

standard of review for legislative regulations this Court

enunciated in Chevron v. NRDC, 104 S. Ct. 2778 (1984)?

. Did the Court of Appeals err in sustaining an EPA regula-

tion extending motor vehicle manufacturers’ emissions re-

call liability beyond the statutorily prescribed 5 year/50,000

mile “useful life” to include all vehicles regardless of age or

mileage?

a ne

PARTIES TO THE PROCEEDINGS

Petitioner General Motors Corporation was the petitioner in

the Court of Appeals. Respondent Lee M. Thomas is the Act-

ing Administrator of the U.S. Environmental Protection Agen-

cy, which issued the rule and final determination reviewed by

the Court of Appeals. There are no other parties to this case.

Pursuant to Supreme Court Rule 28.1, GM’s non-wholly

owned subsidiaries and affiliates are:

Aralmex, S.A. de C.V. (Mexico)

Automotriz Gencor S.A. (Ecuador)

Autos y Maquinas del Ecuador S.A. (AYMESA) (Ecuador)

Compania Nacional de Direcciones Automotrices, S.A. de

C.V. (Mexico)

Compresores Delfa, C.A. (Venezuela)

Convesco Vehicle Sales GmbH (West Germany)

Daewoo Motor Co., Ltd. (Korea)

DHBR—Componentes Automotivos S.A. (Brazil)

Fabrica Colombiana de Automotores S.A. (“Colomotores”)

(Columbia)

General Motors de Colombia S.A. (Columbia)

General Motors Egypt, S.A.E. (Egypt)

General Motors Iran Limited (Iran)

General Motors Kenya Limited (Kenya)

GM Allison Japan Limited (Japan)

GM Fanuc Robotics Corp. (USA)

Industries Mecaniques Maghrebires, S.A. (Tunisia)

Industrija Delova Automobila, Kikinda (Yugoslavia)

Isuzu Motors Limited (Japan)

Isuzu Motors Overseas Distribution Corp. (Japan)

Kabelwerke Reinshagen GmbH (West Germany)

Kabelwerke Reinshagen Werk Berlin GmbH (West

Germany)

Kabelwerke Reinshagen Werk Neumarkt GmbH (West

Germany)

il

new >

Moto Diesel Mexicana, S.A. de C.V. (Mexico)

Motor Enterprises, Inc. (USA)

New United Motor Manufacturing, Inc. (USA)

Omnibus BB Transportes, S.A. (Ecuador)

Promotora de Partes Electronicos Automotrices (Mexico)

P.T. Mesin Isuzu Indonesia ( Indonesia)

Senalizacion y Accesorios del Automovil Yorka, S.A.

(Spain)

Suzuki Motor Co., Ltd. (Japan)

Unicables, S.A. (Spain)

ill

TABLE OF CONTENTS

QUESTIONS PRESENTED ......--+eeeeeeeeeeeees i

PARTIES TO THE PROCEEDINGS .......-+--eeee- ll

Tae OF CONTENTS 6c cccscccccccnncevecernes iv

TABLE OF AUTHORITIES ........ccccceccccecces vi

Cepeprants IW oon ce ns ccc cceessvesevsces

Ce, a ree rr ry re re fry

STATEMENT OF THE CASE .......-cccccscceceses

l

2

Seamer INVOLVED 62... .cc cece cscs ceeseneces 2

3

7

REASONS FOR GRANTING THE WRIT ..........---

I. THE “INTERPRETATIVE RULE” EXCEPTION

From NotTicE AND COMMENT RULEMAKING

SHOULD Not ExTEND To AGENCY

REGULATIONS THAT REFLECT LEGISLATIVE

PoLicy JUDGMENTS MADE IN THE EXERCISE

Or CONGRESSIONALLY DELEGATED

Cy SE ne ee Ete rae eee 9

A.

This Court’s Guidance Is Needed To

Reconcile The Conflicting Tests Applied

By The Courts Of Appeals To Distinguish

Between Interpretative And Legislative

Regulations ........cccecceesecssececes 9

. The Court Of Appeals Should Have

Invalidated EPA’s Regulation As

Legislative Rulemaking Conducted

Without Notice And Comment .......... 15

1. If Recall Liability Is To Be Extended

Beyond The Statutorily Defined Useful

Life For Passenger Cars, Legislative

Rulemaking Is Required ............. 16

iV

~~ eed

IT.

ITI.

2. EPA’s Regulation Conclusively

Resolved Legislative Policy Issues In

Order To Expand The Scope Of The

BUOCNEE PPOGIOME. 5... c cc ecescccsece 18

3. EPA’s Regulation Has A Substantial

so ra On Manufacturers’ Recall

WE dee ee 20

GUIDANCE From Tuis Court Is NEEDED To

RESOLVE CONFUSION IN THE CouRTS OF

APPEALS OVER THE PRoPER APPLICATION

er CN ieee ee ic eee 21

A. The D.C. Circuit Improperiy Applied The

Chevron Standard Of Review To A

Regulation That It Characterized As

oR ere 22

B. The Decision Below Conflicts With Other

Circuits’ Decisions As To The Applicability

TF CIN kd o wks Cancin es ue ole, 25

THE Court OF APPEALS’ AFFIRMANCE OF

EPA’s REGULATION Has Far-REACHING

AND SEVERE IMPLICATIONS For VEHICLE

MANUFACTURERS AND ALL OTHER PERSONS

SUBJECT To ADMINISTRATIVE REGULATION . 27

CMMNCEAIOIE 555 os Nove cee ik inc ee 29

| aaa aaa

TABLE OF AUTHORITIES

Cases

Page

Alcaraz v. Block, 746 F.2d 593 (9th Cir.

errr errr rer err ry rT 13, 15, 26, 28

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504

FEN ck Chane e b AREER CEN SHU MARRERNANAE OS FOUE ES 23

Allen v. Bergland, 661 F.2d 1001 (4th Cir. 1981).... 18, 28

American Bancorporation, Inc. v. Board of Governors,

509 F.2d 29 (8th Cir. 1974) ..... 2... ce eee eee eee 14

American Postal Workers Union v. United States

Postal Service, 707 F.2d 548 (D.C. Cir. 1983), cert.

denied, 104 S. Ct. 1594 (1984) ............-08- 11, 15

American Transfer & Storage Co. v. ICC, 719 F.2d

1988 (Gth Cir. 1988) 2... 2 ccc cee ceeveseeseess 10, 14

American Trucking Ass’n v. United States, 688 F.2d

1337 (11th Cir. 1982), rev'd on other grounds, 104

e+ Of). | eee ee 15

Batterton v. Francis, 432 U.S. 416 (1977) ...........-. 10

Bethlehem Steel Corp. v. Gorsuch, 742 F.2d 1028 (7th

RP Tere err errr er Tee ree 24

Brown Express, Inc. v. United States, 607 F.2d 695

Fe 3... Serer weer rrr rr tr reer 14

Cabais v. Egger, 690 F.2d 234 (D.C. Cir. 1982) ......... 15

Capitano v. Secretary of Health & Human Services,

732 F.2d 1066 (2d Cir. 1984) ............ 0. eee ee 26

Center For Auto Safety v. Ruckelshaus, 747 F.2d 1

(Sas 2 Prrrrere rr re te te 17

Cerro Metal Products v. Marshall, 467 F. Supp. 869

(E.D. Pa. 1979), affd, 620 F.2d 964 (3d Cir. 1980) .. 14

Chevron, U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 104 S. Ct. 2778 (1984) ......... passim

Chrysler Corp. v. Brown, 441 U.S. 281 (1979) ... 10, 11, 15

Chrysler Corp. v. EPA, 631 F.2d 865 (D.C. Cir.), cert.

denied, 449 U.S. 1021 (1980) ............ 2. enone 5

Citizens to Save Spencer County v. EPA, 600 F.2d 844

|) ie 2. Seeereerrer were rT errr rt 11

vi

Table of Authorities—Continued

Page

Columbia Broadcasting System, Inc. v. United States,

Say Mists WOW COON wh 4s Wks v6 66040 56 aneacecs 12, 14

Daughters of Miriam Center for the Aged v. Mathews,

590 F.2d 1250 (8d Cir. 1978) ..... 0... ccc ccc eens 23

Department of Labor v. Kast Metals Corp., 744 F.2d

oe ks 2 eee eee 12, 14, 15

Detroit Edison Co. v. EPA, 496 F.2d 244 (6th Cir.

SE uatbe eas bhsb en ka aked cee ced ieee es 12, 14, 28

Eastern Kentucky Welfare Rights Organization v.

Simon, 506 F.2d 1278 (D.C. Cir. 1974), rev’d on

other grounds, 426 U.S. 26 (1976) ............ 12, 28

E nergy Reserves Group, Inc. v. DOE, 589 F.2d 1082

(Temp. Gamer, Ct. Bom. 1OTB).. ow... cscs as cccssns 15

First Bancorporation v. Board of Governors, 728 F.2d

I TE Ske 6 cna ks ke eA odd wesw ke 14

Frank Diehl Farms v. Secretary of Labor, 696 F.2d

SE SAO AA Es 5 ck do ceksxdenedaKkncenkccar 23

General Electric Co. v. Gilbert, 429 U.S. 125 (1976)... 10,

12, 23

General Electric Co. v. OSHA Comm’n, 583 F.2d 61

CN re ee ee ere ee Tee 23

Gosman v. United States, 573 F.2d 31 (Ct. Cl. 1978).... 13

Iowa Power & Light Co. v. Burlington Northern, Inc.,

647 F.2d 796 (8th Cir. 1981), cert. denied, 455

Fila, PE SN A BN a ck nad ela phn dae dew honkaks 14

Jean v. Nelson, 711 F.2d 1455 (11th Cir. 1983), mooted

prior to rehearing en banc, 727 F.2d 957 (1984) .... 15

Levesque v. Block, 723 F.2d 175 (1st Cir. 1983)..... 13, 28

Lewis-Mota v. Secretary of Labor, 469 F.2d 478 (2d Cir.

ET eRe Pe Oe aT See 12, 14, 28

Livermore v. Heckler, 743 F.2d 1396 (9th Cir. 1984) ..... 26

Mayburg v. Secretary of Health & Human Services,

14 F.2d 100 (Ist Cir. 1984)...................... 26

Morton v. Ruiz, 415 U.S. 199 (1974) .............. 13, 14

Vii

Table of Authorities—Continued

National Distributing Co. v. United States Treasury

Department, 626 F.2d 997 (D.C. Cir. 1980) ........ 23

National Nutritional Foods Ass’n v. Weinberger, 512

F.2d 688 (2d Cir.), cert. denied, 423 U.S. 827

ae ere ee ee Tree ee 12

New England Telephone & Telegraph Co. v. Public

Utilities Comm’n, 742 F.2d 1 (1st Cir. 1984) ....... 26

Northwest Airlines, Inc. v. Goldschmidt, 645 F.2%

SD GD GA TIED 6 vias we vaeeresantscnsedecance 10

Pesikoff v. Secretary of Labor, 501 F.2d 757 (D.C. Cir.),

cert. denied, 419 U.S. 1088 (1974) ................ 12

Pharmaceutical Manufacturers Ass’n v. Finch, 307 F.

Supp. 858 (D. Del. 1970) ................ 0. seen 28

Philbrook v. Glodgett, 421 U.S. 707 (1975) ............. 13

Powderly v. Schweiker, 704 F.2d 1092 (9th Cir. 1983)... 18

Rettig v. Pension Benefit Guaranty Corp., 744 F.2d 133

Fake 2 ee ee ree eee 26

Rivera v. Becerra, 714 F.2d 887 (9th Cir. 1983), cert.

denied, 104 S. Ct. 1591 (1984) .......... 2. eeeee 15

Simon v. Eastern Kentucky Welfare Rights

Organization, 426 U.S. 26 (1976) ............2666- 11

Sinclair Refining Co. v. Atkinson, 370 U.S. 195

(1962), overruled on other grounds, Boys Markets,

Inc. v. Retail Clerk’s Union, 398 U.S. 235 (1970)... 18

Skidmore v. Swift & Co., 323 U.S. 134 (1944)... 22, 23, 24

Vermont Yankee Nuclear Power Corp. v. Natural

Resources Defense Council, Inc., 435 U.S. 519

Deere esr re ewer rer eee 15, 25

Statutes and Regulations

Administrative Procedure Act, 5 U.S.C.

Eg FSi. AP ererrrrrrrr erties passim

6 U.Bi. 4 EOD 0 paw ine cncessassncescas esas 9, 10

Fie Fem ef | ewerrrrrr Sere rer rey re 22

Vili

Cnn,

Table of Authorities—Continued

Page

Clean Air Act, as amended, 42 U.S.C. $8 7401 et seq.

PP a Ushtanencuv eater dee told ovek st passin

Section 202(d)(1), 42 U.S.C. § 7521(d)(1) ........... 2.3

Section 206(a), 42 U.S.C. § 7525(a) ..............6-5. 4

Section 206(b), 42 U.S.C. § 7525(b).................. 4

Section 207, 42 U.S.C. § 7641 .............000050... 17

Section 207(a), 42 U.S.C. § 7541(a).................. 4

Section 207(b), 42 U.S.C. § 7541(b).................. 4

Section 207(c), 42 U.S.C. § T541(c)............-.0.. 17

Section 207(c)(1), 42 U.S.C. § 7541(e)(1).. 2, 4, 6, 20, 23

Section 207(¢c)(2), 42 U.S.C. § 7541(e)(2)............. 12

Section 301(a)(1), 42 U.S.C. § 7601(a)(1)...4......... 12

Section 307(b), 42 U.S.C. § 7607(b).............. 21, 25

Section 307(d)(1), 42 U.S.C. § 7607(d)(1)............ 10

Section 307(d)(1)(L), 42 U.S.C. § 7607(d)(1)(L)....... 12

Section 307(d)(9), 42 U.S.C. § 7607(d)(9) ............ 22

28 U.S.C. § 1254(1) (1982) .... 00... cece ee eee ee. 2

ee | 2

ee SL 4

dp ef 4

ee ee 20

40 C.FLR. § 85.1803 Appendix A................. 3, 21

40 C.F.R. § 86.084-8 (1984) .................0........ 27

Miscellaneous

M. Asimow, Public Participation in the Adoption of

Interpretative Rules and Policy Statements, 75

Mich. L. Rev. 520 (1977) .................000. 11, 12

2 K. Davis, Administrative Law Treatise (2d ed. 1979

MR NG 6 bs anc un iwc ud vnncndhus cones 10, 23

2A J. Sutherland, Statutes and Statutory Construction

(Sands 4th rev. ed. 1984) 0.0.0.0... ccc cece ee ee. 13

ix

Table of Authorities—Continued

Page

M. Warren, The Notice eee in Administrative

Rulemaking: An Analysis of Le islative and

Interpretative Rules, 29 Ad. L. Rev. 367 (1977)... 11,

12, 21

Note, The Interpretative Rule Exemption: A

Definitional A h to Its Application, 15 Ind.

Re, Bee, BIR CHD cv cccccccccsccccescsccceccoese 11

39 Fed. Reg. 44375 (1974) ........ eee e cece cece eeees 20

45 Fed. Reg. 36396 (1980) .........--0eeeeeeeeee 4, 18, 20

S. Rep. No. 1196, 91st Cong., 2d Sess. (1970),

reprinted in 1 1970 Legislative History of the

6 De SS errr errr ryrrr rire rT ree 3, 17

Legislative History of the APA, S. Doe. 248, 79th

Cong., 2d Sess. (1946) .......---eeeeeeeeceeeeeee 25

Supreme Court Rule 28.1.........--00+-+eeeeeeees ii, iii

Brief for Petiticner, Simon v. Eastern Kentucky

Welfare Rights Organization, 426 U.S. 26 (1976)... 1

Brief for Respondent, Simon v. Eastern Kentucky

Welfare Rights Organization, 426 U.S. 26 (1976)... 11

“Compilation of Air Pollutant Emissions Factors:

ighway Mobile Sources,” EPA 460/3-81-005

PN SEED cock cr dddebeseadsseesecrcceseses 27

U.S. Environmental Protection Agency, Office of the

Comptroller, “Summary of the 1985 Budget”

(January 1984) .........ccccccccccccceccessccces 27

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

GENERAL Motors CorPorRATION,

Petitioner,

V.

LEE M. Tuomas, AcTING ADMINISTRATOR,

UNITED StaTES ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioner, General Motors Corporation, respectfully re-

quests that a writ of certiorari issue to review the judgment

and decision of the Court of Appeals for the District of Colum-

bia Circuit entered on September 7, 1984.

OPINIONS BELOW

The opinions of the Court of Appeals issued after rehearing

en banc are published at 742 F.2d 1561 and are reprinted in the

Appendix as App. A. The panel opinions of the Court of Ap-

peals are published at 724 F.2d 979 and are reprinted as App. B.

The Court of Appeals’ rehearing orders and judgment are

included as App. C and App. D, respectively. The “Interpretive

Rule” promulgated by respondent and its June 23, 1980 final

action are reprinted as App. E and App. F, respectively.

2

JURISDICTION

The judgment of the Court of Appeals en banc was entered

on September 7, 1984. The Chief Justice on November 29, 1984

extended the time for filing this petition to and including Janu-

ary 7, 1985. The jurisdiction of this Court is invoked under 28

U.S.C. § 1254(1) and 28 U.S.C. § 1651.

STATUTES INVOLVED

The statutes and regulations involved are the Administrative

Procedure Act, 5 U.S.C. §§ 551 et seq., the Clean Air Act, as

amended, 42 U.S.C. §§ 7401 et seq., and regulations adopted

thereunder, 40 C.F.R. Part 85.

The principal provision of the Clean Air Act at issue here is §

207(c)(1),! which provides in pertinent part:

“lf the Administrator determines that a substantial

number of any class or category of vehicles or engines,

although —y maintained and used, do not conform to

the re ions prescribed under section 202, when in

actual use throughout their useful life (as determined

under section 202(d)), he shall immediately notify the

manufacturer thereof of such nonconformity, and he shall

require the manufacturer to submit a plan for remedying

the nonconformity of the vehicles or engines with respect

to which such notification is given. The plan shall provide

that the nonconformity of any such vehicles or engines

which are properly used and maintained will be remedied

at the expense of the manufacturer.” (Emphasis added.)

“Useful life” is defined in § 202(d)(1) as five years or fifty

thousand miles, whichever occurs first. The challenged EPA

regulation provides that manufacturers must remedy all

“vehicles which experienced the nonconformity during their

! For the Court's convenience, citations throughout are to the sections of

the Clean Air Act. Parallel citations to the U.S. Code are provided in the

Table of Authorities.

3

useful lives regardless of their age or mileage at the time of

repair.” 40 C.F.R. § 85.1803 Appendix A (emphasis added).

Other materials pertinent to the legislative history are re-

printed in App. G, and to the history of the challenged regula-

tion in App. H.

STATEMENT OF TiiE CASE

This is a case of first impression regarding EPA’s power to

expand the scope of vehicle manufacturers’ emissions recall

liability under the Clean Air Act. The petition squarely pre-

sents two issues of major significance in administrative law,

each of which merits plenary consideration by this Court.

First, the petition asks this Court to articulate a test which

federal courts can apply consistently to distinguish between

legislative and interpretative rules. Second, the petition estab-

lishes the need for this Court to clarify that the highly deferen-

tial standard of review for policy-based regulations articulated

in Chevron v. NRDC, 1048S. Ct. 2778 (1984), does not extend to

interpretative rules adopted without notice and comment

rulemaking.

Statutory Background. By amendments enacted in 1970,

the Clean Air Act requires that all passenger motor vehicles

sold in the United States be designed, built and warranted to

comply with emissions standards during their useful lives.

“Useful life,” in turn, is defined in § 202(d)(1) as 5 years or

50,000 miles, whichever sooner occurs. The 5 year/50,000 mile

useful life period was chosen purposefully by Congress to

establish a reasonable limit on vehicle manufacturers’ obliga-

tions to ensure compliance with the emissions standards:

“The manufacturers informed the Committee that they

would not be able to guarantee conformity with emissions

standards for the anticipated 10-year life of a vehicle. The

committee bill provides that 50,000 miles would be the

maximum that a vehicle would be required to conform to

the standards for which it was certified.” S. Rep. No.

1196, 91st Cong., 2d Sess. 30 (1970), reprinted in 1 1970

4

Legislative History of the Clean Air Act at 430 (emphasis

added). App. G-27.

In keeping with this legislative judgment, Congress directed

that a manufacturer's liability under the Clean Air Act’s over-

lapping compliance scheme, including new model certification

(§ 206(a)), assembly line testing (§ 206(b)) and defect warranty

(§ 207(a)), terminates once a vehicle has attained 5 years or

50,000 miles of service.* The same legislative judgment is

reflected in § 207(c)(1), which empowers EPA, when it deter-

mines that a substantial number of a vehicle class do not

conform with applicable emissions standards during their 5

year/50,000 mile useful lives, to order a manufacturer to sub-

mit a plan for remedying the nonconformity of such veiiicies at

the manufacturer’s expense.

The “Interpretive Rule” and the Agency’s Order. On May

22, 1980, without notice and comment, EPA adopted a “nation-

ally applicable regulation” to become effective on May 30, 1980.

45 Fed. Reg. 36396. This regulation amended 40 C.F.R. §

85. 1803* by adding an “interpretive ruling” which, in language

that is imperative, not interpretative, requires that each re-

media! plan:

“provide that the manufacturer will remedy, at the manu-

facturer’s expense, all ay pd maintained and used vehi-

cles which experienced the nonconformity during their

2 The 1970 amendments also limited the performance warranty of emis-

sions control components to 5 years or 50,000 miles. That warranty period

contii 1es for “sole or primary purpose” components, but was reduced for

other components to 2 years or 24,000 miles by the Clean Air Act Amend-

ments of 1977. Section 207(b).

3 In 1974, after notice and opportunity for comment, EPA promulgated the

initial regulations governing recalls. 40 C.F.R. Part 85. Section 85.1803 sets

forth the required contents of recall remedial plans, including recall method-

ology, description of the repair, texts of repair instructions and other such

information.

0

useful iives regardless of their age or mileage at the time of

repair.” (Emphasis added.)

Prior to the controversy with GM in this case and the unfore-

seen promulgation of the above regulation, manufacturers had

no hint that EPA would negate the 5 year/50,000 mile useful life

limitation on recall repair liability.4

In March 1977, three years before the regulation was

adopted, EPA had ordered GM to recall certain 1975 Cadillacs.

Prior to that order, GM had volunteered to recall those cars and

in April 1977, submitted a proposed remedial plan voluntarily

including additional vehicles. Timely acceptance of GM’s plan

would have assured the eligibility for repair of all affected

vehicles. Nonetheless, EPA initially rejected the GM plan.®

After 2% years of protracted negotiations, EPA finally accept-

ed GM’s plan in December 1979. By that time, many of the 1975

Cadillacs had exceeded their 5 year or 50,000 mile statutory

useful lives. GM’s final remedial plan of February 5, 1980 there-

fore provided that those vehicles which had exceeded their

4 The judges below disagreed at length whether EPA’ interpretation was

“longstanding” before the “need” for an “interpretative” regulation was

conceived. Compare App. A-8 n.7 (en banc majority) with App. A-26 nn.11 &

12 (en bance dissent). In fact, as the factual “record” compiled by the agency

confirms, the issue of the manufacturer's duty to fix cars whose useful lives

had ended had been disputed only once, in a recall of certain Chrysler

vehicles. See App. H-6. The useful life issue was not pressed in that case,

however, because the initial determination of nonconformity was the focus of

dispute. Chrysler Corp. v. EPA, 631 F.2d 865 (D.C. Cir.), cert. denied, 449

U.S. 1021 (1980).

5 EPA insisted initially that GM audit the repaired vehicles to monitor the

performance of independent dealers of GM vehicles. GM objected that such

an audit and the related enforcement sanctions EPA expected GM to under-

take exceeded EPA's statutory authority and would inappropriately alter

GM's business relationships with its dealers. EPA ultimately withdrew its

insistence on the audit and approved GM’s remedial plan. See Ct. Appeals

Joint App. 142, 145-46, 252.

ileal een

6

useful lives would not be included because they were no longer

subject to the emissions standards.

EPA did not then act on GM’s final plan. Instead, to bolster a

position its enforcement personnel wanted to take, EPA's staff

prepared an internal memorandum “supporting need for inter-

pretive rule on motor vehicle manufacturers liability for repair

of recall vehicles.” App. H-1 (May 9, 1980). Based on that

memorandum, EPA adopted its new nationally applicable reg-

ulation and made it effective upon publication, May 30, 1980.

App. E-1. Three weeks later, citing the regulation, EPA or-

dered GM to recall and repair the 1975 Cadillacs regardless of

their age or mileage or else suffer “fines of up to $10,000 per

vehicle.” App. F-4. On the basis of factual assumptions and

policy determinations that were not tested by notice and com-

ment rulemaking, this new regulation effectively reads the 5

year/50,000 mile limit on repair obligations out of § 207(c)(1) of

the Act.

The Court of Appeals’ Decisions. GM sought review in the

D.C. Circuit of EPA’s new regulation and its final order. On

December 16, 1983, a panel of that Court vacated both. Judge

Bazelon held that EPA’s interpretation was entitled only to

limited deference and was inconsistent with the plain statutory

text and legislative history. App. B-1. Judge Wilkey filed a

concurring opinion comparing four possible constructions of §

207(c)(1) and identifying the construction he believed the legis-

lative history supported. App. B-43. Judge Wald dissented,

agreeing with EPA’s interpretation. App. B-47.

On EPA’s petition, the court ordered rehearing en banc. A

divided Court of Appeals thereafter upheld EPA's regulation

and order, purporting to follow this Court’s intervening deci-

sion in Chevron v. NRDC, 104 S. Ct. 2778 (1984). Judge Wald,

writing for the en banc majority, accepted EPA’s characteriza-

tion of the regulation as interpretative and held therefore that

notice and comment procedures were not necessary. The court

recognized, however, that the regulation was devised to imple-

7

ment “EPA policy” and “policy choices” and to effectuate se-

lected “policy goals.” App. A at 8-11 & n.7, 11-12 & n.8, 13, 17,

20-22. Based on the highly deferential Chevron standard of

review and the “respect” it believed Chevron mandated for

those policy determinations, the majority then upheld the reg-

ulation as imposing an acceptable requirement having

“adequate support” in the statute and its purpose. Jd. at 11-23

& 11-12 n.8.

REASONS FOR GRANTING THE WRIT

The two administrative law issues presented by this petition

govern both the public's opportunity to participate before an

agency promulgates regulations and the standard of judicial

review to be applied after regulations are adopted. Each of the

issues meets the traditional standards for exercise of this

Court's jurisdiction and has far-reaching implications, not only

for motor vehicle manufacturers, but for all persons subject to

administrative regulation.

First, the petition asks this Court to clarify the test for

distinguishing between legislative regulations, which can be

promulgated only after notice and comment, and inter-

pretative rules, which are exempt from those safeguards. Al-

though the consequences of this distinction have long been

critical to the conduct of administrative proceedings and judi-

cial review of agency regulations, this Court has never articu-

lated a test for making the legislative-interpretative distinc-

tion. In the absence of guidance from this Court, agencies and

lower federal courts have developed their own differing and

often conflicting formulations.

Second, the petition asks this Court to resolve a conflict over

whether the highly deferential standard of review for policy-

based, legislative regulations articulated in Chevron v. NRDC.

104 S. Ct. 2778 (1984), should be extended to interpretative

rules. The court below held that Chevron does govern review of

the regulation involved here, which it had classified as inter-

8

pretative. At least two other circuits, in contrast, have con-

cluded that Chevron does not apply to interpretative rules.

While each of these issues independently warrants granting

certiorari, the issues are closely intertwined in many respects.

Thus, this Court’s decision in Chevron, especially as applied by

the D.C. Circuit, also underscores the need for definitive guid-

ance in distinguishing between legislative and interpretative

regulations. In addressing the applicable standard of judicial

review, Chevron distinguished between instances where Con-

gress has expressed its own intent regarding an issue, leaving

to agencies the effectuation of that intent, and cases where

Congress “has not directly addressed the precise question.”

104 S. Ct. at 2781-82. In the latter case, Congress delegates

authority to the agency, either explicitly or implicitly, to re-

solve questions of implementation based on the agency’s ac-

comodation of competing policies and interests. Contrary to

the D.C. Circuit’s decision en banc, only regulations adopted

pursuant to such delegated legislative responsibility are en-

titled to Chevron’s particularly deferential standard of review.

At the same time the D.C. Circuit has improperly extended

the Chevron standard of review to interpretative rules, its

approach ignores the lessons of Chevron for making the legisla-

tive-interpretative distinction. Chevron’s focus on whether

Congress itself intended to resolve an issue, or instead left the

issue for the agency to resolve in policy-based regulations,

demonstrates that the EPA regulation involved here should

have been treated as legislative, not interpretative. Elements

of the tests employed by several other circuits also indicate the

regulation is legislative. The consequence of the D.C. Circuit's

conflicting approach is that EPA and other agencies will be free

to make legislative policy choices without following the notice

and comment requirements designed to inform agency deci-

sionmakers. Yet, despite the absence of notice and comment,

the D.C. Circuit accords to “interpretative” regulations the

same high level of judicial deference that Chevron accords only

when all procedural safeguards have been observed.

9

Finally, while the administrative law issues here arise in a

case of great importance to GM and the automobile industry,

they apply universally to all individuals and businesses affected

by agency action. EPA’s new regulation, by overriding the

statutory useful life limitation, significantly expands the recall

repair obligations of automobile manufacturers in a program

that involves millions of vehicles per year. If such policy-based

regulations going beyond Congress’ expressed intent and hav-

ing such profound impact are to be adopted—whether for the

automobile industry, recipients of social security, AFDC or

other benefits, or the public at large—the regulations should

be recognized as legislative and adopted with the benefit of the

public participation contemplated by the Administrative Pro-

cedure Act. Not only does that participation provide the infor-

mation essential to reasoned decisionmaking, it is the very

justification for according administrative agencies the authori-

ty to resolve such legislative issues in the first place.

I. THE “INTERPRETATIVE RULE” EXCEPTION

FROM NOTICE AND COMMENT RULEMAKING

SHOULD NOT EXTEND TO AGENCY REGULATIONS

THAT REFLECT LEGISLATIVE POLICY JUDG-

MENTS MADE IN THE EXERCISE OF CONGRES-

SIONALLY DELEGATED AUTHORITY.

A. This Court’s Guidance Is Needed To Reconcile The

Conflicting Tests Applied By The Courts Of Appeals

To Distinguish Between Interpretative And Legisla-

tive Regulations.

The distinction between “interpretative” and “legislative”

regulations is fundamental in administrative law and has been

part of the Administrative Procedure Act since its enactment.

5 U.S.C. § 553(b)(A). “Legislative” or “substantive” regula-

tions are subject to the notice and comment requirements of

the APA, whereas “interpretative” rules are exempt from

those procedural safeguards. Notice and comment procedures

serve both to inform the agency’s decisionmaking and to assure

10

the integrity of the process by which an agency makes legisla-

tive or policy judgments.® Once adopted, legislative regula-

tions have the force and effect of law. Interpretative rules, by

contrast, have no binding effect and serve only to advise the

public of an agency’s construction of a statute. Chrysler Corp.

v. Brown, 441 U.S. 281, 301-03 (1979).

It is by legislative regulation that an agency, delegated legis-

lative authority by Congress, implements policy choices. The

agency is the final arbiter of those choices, subject only to

limited judicial review as directed by Congress. On the other

hand, only the judicial branch can make binding decisions on

issues properly subject to treatment in interpretative rules,

giving varying degrees of deference to the agency’s views. /d.

at 301-03; Batterton v. Francis, 432 U.S. 416, 425 & n.9 (1977);

2 K. Davis, Administrative Law Treatise § 7:13 (2d ed. 1979).

Accordingly, the classification of an agency’s action as legisla-

tive or interpretative significantly affects the procedures for its

adoption, its legal effect and the applicable standard of judicial

review.

Despite the significant implications of the distinction, this

Court never has articulated a test for determining whether an

agency rule is interpretative as opposed to legislative.’ Indeed,

6 Specifically, § 4(b)(A) of the APA, incorporated by reference in Clean Air

Act § 307(d)(1), exempts “interpretative rules, general statements of policy,

or rules of agency organization, procedure, or practice” from notice and

comment rulemaking. Although the instant regulation rested heavily on the

agency's policy views, it cannot be classified as a “general statement of

policy,” nor has the agency attempted to invoke that exception. Because of

the importance of allowing public participation and developing a sufficient

record for agency decisionmaking, these exemptions are to be narrowly

construed. American Transfer & Storage Co. v. ICC, 719 F.2d 1283, 1295 (5th

Cir. 1983): Northwest Airlines, Inc. v. Goldschmidt, 645 F.2d 1309, 1321 (8th

Cir. 1981).

7 The Court's decisions in Whirlpool Corp. v. Marshall, 445 U.S. 1 (1980);

Chrysler Corp. v. Brown, 441 U.S. 281 (1979); Batterton v. Francis, 432 U.S.

416 (1977); and General Electric Co. v. Gilbert, 429 U.S. 125 (1976), address

the consequences of the distinction, but do not provide a test for making the

distinction.

11

the Court highlighted in Chrysler the absence of such a test

and pointed out that most of the relevant sources for guidance

“essentially offer definitions by negative inference.” 441 U.S.

at 301-02. Although certiorari was granted to consider this

issue in Simon v. Eastern Kentucky Welfare Rights Organiza-

tion, 426 U.S. 26 (1976), the Court ultimately resolved that

case on other grounds.® The recognized need for this Court's

guidance thus remains unmet.

The court below also acknowledged that the present stan-

dards for distinguishing between interpretative and legislative

rules are “‘enshrouded in considerable smog.’ ”® App. A-7 (en

banc majority). Nevertheless, based on the general principles

established in its prior decisions, the Court of Appeals held

that EPA’s regulation extending the recall remedy was “inter-

pretative” in nature and exempt from notice and comment

procedures. First, the court gave considerable weight to EPA’s

“own label” of the regulation as “interpretative.” Jd. Second,

the court concluded that EPA had not “intend/ed/ to create

new law, rights or-duties.”!” App. A-8 (emphasis added). Al-

“ Specifically, the welfare rights organization presented the question

whether a “substantia! impact” test should be employed. Brief for Petitioner

at 3, 41-47; Brief for Respondent at 3, 97-103. This Court disposed of the case

on the ground, raised by the cross-petitioner, that the organization lacked

standing to challenge the agency’s rule.

% A number of commentators have lamented the absence of guidance. See,

e.g., M. Asimow, Public Participation in the Adoption of Interpretative

Rules and Policy Statements, 75 Mich. L. Rev. 520, 523-24, 561 (1977); M.

Warren, The Notice Requirement in Administrative Rulemaking: An Anal-

ysis of Legislative and Interpretative Rules, 29 Ad. L. Rev. 367, 368-74

(1977); Note, The Interpretative Rule Exemption: A Definitional Approach

to Its Application, 15 Ind. L. Rev. 875 (1982).

\” That the intent of the agency was critical to the court’s holding is

confirmed by the prior decisions from which the court drew its general

principles. App. A at 7-8. See, e.g., American Postal Workers Union v.

United States Postal Service, 707 F.2d 548, 558-60 (D.C. Cir. 1983), cert.

denied, 1048. Ct. 1594 (1984); Citizens to Save Spencer County v. EPA, 600

F.2d 844, 876 (D.C. Cir. 1979). Moreover, while the court mentioned creation

[Footnote continued |

12

though not addressed explicitly in its opinion, the court’s analy-

sis also reflects the so-called “legal effect” or “binding effect”

test used elsewhere by the D.C. Circuit to distinguish legisla-

tive from interpretative rules. !!

None of these principles is adequate to provide a meaningful

test. When an agency has been delegated the authority to

promulgate legislative regulations, as EPA has under §

207(c)(2), 2 the test should focus on whether the agency has, in

fact, exercised that delegated authority. As other courts have

recognized, an agency’s label and intent may bear little rela-

tionship to that inquiry, and both label and intent are far less

important than the agency’s actions.!’ Moreover, according

significant weight to the agency’s intent, label or disclaimer of

binding effect carries the potential for self-serving circumven-

tion of APA and Clean Air Act requirements.'* Finally, the

of new duties in its test, it conducted no analysis of the duties and obligations

actually imposed by EPA's regulation. See pages 20-21, 27-28 infra.

11 According to this test, a rule that an agency concedes will be given no

legal or binding effect is considered interpretative. See, ¢.g., Eastern Ken-

tucky Welfare Rights Organization v. Simon, 506 F.2d 1278, 1290 (D.C. Cir.

1974), rev'd on other grounds, 426 U.S. 26 (1976); National Nutritional

Foods Ass'n v. Weinberger, 512 F.2d 688, 698 n.8 (2d Cir.), cert denied, 423

U.S. 827 (1975); Pesikoff v. Secretary of Labor, 501 F.2d 757, 763-64 n.12

(D.C. Cir.), cert. denied, 419 U.S. 1038 (1974).

\2 The distinction addressed here becomes relevant only when Congress

has given an agency authority to engage in legislative rulemaking. Genera/

Electric Co. v. Gilbert, 4229 U.S. 125 (1976). Section 207(c)(2) of the Clean Air

Act explicitly provides EPA that authority. See also § 301(a)(1) and §

307(d)(1)(L).

3 Detroit Edison Co. v. EPA, 496 F.2d 244, 249 (6th Cir. 1974); Lewis-

Mota v. Secretary of Labor, 469 F.2d 478, 481-82 (2d Cir. 1972). See also

Columbia Broadcasting System, Inc. v. United States, 316 U.S. 407, 416

(1942); Department of Labor v. Kast Metals Corp., 744 F.2d 1145, 1149 (Sth

Cir. 1984) (a “paisley ribbon will not make up for damaged goods; the sub-

stance, not the label, is determinative”).

M4 See generally M. Asimow, supra note 9, at 557-58; M. Warren, supra

{Footnote continued |

13

“legal effect” criterion used by the D.C. Circuit has been

rejected elsewhere as mistaking the consequences of the dis-

tinction for a means to make the distinction. !

While the conflicting decisions by other Courts of Appeals do

not provide a unified or settled alternative to the D.C. Circuit's

approach, the decisions of several circuits and of this Court

suggest that a primary element in making the distinction must

be the existence of congressional intent. When Congress has

actually expressed an intent in a statute or its legislative histo-

ry, rules that essentially restate or explain Congress’ intent

may fairly be considered interpretative. !© But when Congress

has delegated to an agency the responsibility to add meaning to

a provision, either by explicit direction or implicitly by not

expressing any “actual intent” on an issue, the agency’s imple-

menting regulation must be legislative in nature. See Chevron

v. NRDC, 1048S. Ct. at 2791, 2793 (1984); Morton v. Ruiz, 415

U.S. 199, 231 (1974). Indeed, because the touchstone of stat-

utory interpretation is congressional intent,'!? there can be no

note 9, at 370. The context in which the regulation challenged here was

promulgated is instructive. Far from being a dispassionate exercise in pub-

lishing a notice to advise the public of an EPA construction of the statute, the

interpretative regulation was an advocate's response to a specific element of a

GM remedial pian to which the agency's enforcement personnel objected. See

pages 5-6 supra.

15 See, e.g., Alcaraz v. Block, 746 F.2d 593, 614 (9th Cir. 1984) (this

principle “is only an effect of the distinction|,] not a criterion of distinction”).

See also Levesque v. Block, 723 F.2d 175, 181-82 (1st Cir. 1983) (“[e|very rule

is intended to have some effect”).

6 See, e.g., Powderly v. Schweiker, 704 F.2d 1092, 1098 (9th Cir. 1983)

(“liJnterpretative rules are those which merely clarify or explain existing

law”); Allen v. Bergland, 661 F.2d 1001, 1006-07 (4th Cir. 1981) (an “inter-

pretative rule effectuates no change in policy or law”); Gosman v. United

States, 573 F.2d 31, 39 (Ct. Cl. 1978) (“merely clarifies or explains existing

law or regulations”). See also Chevron v. NRDC, 1048. Ct. at 2781-82 & n.9.

17 Philbrook v. Glodgett, 421 U.S. 707, 713 (1975); Sinclair Refining Co. v.

Atkinson, 370 U.S. 195, 215 (1962); 2A J. Sutherland, Statutes and Statutory

Construction § 45.05 (Sands 4th rev. ed. 1984).

14

mere interpretation in cases where Congress had no actual

intent. In those situations, the agency’s regulation must be

legislative.

This Court's decisions suggest that a second crucial element

in making the distinction must be whether an agency’s regula-

tion involves significant policy determinations. Anagency may

formulate policy or reconcile competing policies only by exer-

cising delegated responsibility that is inherently /egis/ative in

nature. But an agency promulgating an interpretative regula-

tion, drawing on actual congressional intent, need not make

policy determinations because Congress already has made

them. Accordingly, this Court has held that when an agency

makes policy determinations to fill gaps left explicitly or im-

plicitly by Congress, it must do so by legislative rulemaking.

Morton v. Ruiz, 415 U.S. at 231-35. Accord, Chevron v.

NRDC, 104 S. Ct. at 2793; Columbia Broadcasting System,

Inc. v. United States, 316 U.S. 407, 422 (1942). With few

exceptions, however, see, ¢.g., First Bancorporation v. Board

of Governors, 728 F.2d 434, 438 (10th Cir. 1984), the lower

federal courts have failed to recognize this basis for dis-

tinguishing legislative from interpretative regulations.

Finally, several circuits consider the impact of a regulation in

determining whether it is legislative or interpretative. Under

this approach, a regulation imposing obligations which have a

“substantial impact” reflects the agency’s exercise of legisla-

tive authority, provided Congress delegated such authority. '*

* Jowa Power & Light Co. v. Burlington Northern, lnc., 6A7 F.2d. 796 (8th

Cir. 1981), cert. denied, 455 U.S. 907 (1982); American Bancorporation, Ine.

v. Board of Governors, 09 F.2d 29, 33 (8th Cir. 1974): Depart ment of Labor v.

Kast Metals Corp., 744 F.2d 1145, 1152-54 & n.19 (Sth Cir. 1984); American

Transfer & Storage Co. v. ICC, 719 F.2d 1283 (Sth Cir. 1983); Brown E-rpress,

Inc. v. United States, (7 F.2d 695, 701-02 (Sth Cir. 1979); Lewis-Mota v.

Secretary of Labor, 469 F.2d 478, 481-82 (2d Cir. 1972); Detroit Edison Co. v.

EPA, 496 F.2d 244 (6th Cir. 1974): Cerro Metal Products v. Marshall, 467 F.

Supp. 869, 879-80 (E.D. Pa. 1979), aff'd, 620 F.2d 964, 951-82 (3d Cir. 1980),

15

The D.C. Circuit, on the other hand, along with the Ninth

Circuit and the Temporary Emergency Court of Appeals, re-

jects the “substantial impact” approach for distinguishing be-

tween legislative and interpretative rules. '!* To the extent this

Court has mentioned the point, it has taken the view, rejected

by the D.C. Circuit, that one inherent characteristic of a legis-

lative regulation is that it “ ‘affect[s] individual rights and

obligations.’ ” Chrysler Corp. v. Brown, 441 U.S. 281, 302

(1979).

Only plenary consideration by this Court can reconcile these

conflicting approaches and provide lower courts the necessary

guidance for distinguishing between legislative and inter-

pretative regulations.

B. The Court Of Appeals Should Have Invalidated EPA's

Regulation As Legislative Rulemaking Conducted

Without Notice And Comment.

The principles applied by the Court of Appeals in determin-

ing that EPA’s regulation was interpretative led it to uphold

EPA's regulation extending the recall remedy despite the agen-

cy’s failure to conduct notice and comment rulemaking. Yet the

'% Cabais v. Egger, 690 F.2d 234, 237 & n.5(D.C. Cir. 1982) (commenting on

the conflict); American Postal Workers Union vy. United States Postal Ser-

vice, T07 F.2d 548, 558-60 (D.C. Cir. 1983), cert. denied, 104 8. Ct. 1594

(1984); Alcaraz v. Block, 746 F.2d 593, 612 (9th Cir. 1984); Rivera v. Becerra,

714 F.2d 887, 889-91 (9th Cir. 1983), cert. denied, 104 8. Ct. 1591 (1984);

Energy Reserves Group, Inc. v. DOE, 589 F.2d 1082, 1093-95 (Temp. Emer.

Ct. App. 1978). See American Trucking Ass'n v. United States, 688 F.2d

1437, 1351-52 (11th Cir. 1982) (criticizing substantial impact test but cou-

strained by Fifth Circuit precedent), rev'd on other grounds, 1048. Ct. 2458

(1984); Jean v. Nelson, 711 F.2d 1455, 1479-80 n.20 (11th Cir. 1983) (same),

mooted prior to rehearing en bane, 727 F.2d 957, 962 (1984).

The Ninth Circuit, in particular, has concluded that use of the substantial

impact test is precluded by the holding in Vermont Yankee Nuclear Power

Corp. v. NRDC, 425 U.S. 519 (1978), whereas the Fifth Circuit concludes

that Vermont Yankee has no bearing on this distinction. See Department of

Labor v. Kast Metals Corp., 744 F.2d at 1154 & n.19.

16

Court of Appeals’ opinions and the agency’s treatment both

establish that the regulation is inherently legislative, not inter-

pretative, in nature. The issues resolved by EPA's regulation,

including major policy determinations, thus are precisely the

type which must be decided only with the benefit of public

comment.

1. If Recall Liability ls To Be Extended Beyond The Stat-

utorily Defined Useful Life For Passenger Cars, Legis-

lative Rulemaking Is Required.

The Court of Appeals’ analysis of the statute and its legisla-

tive history alone is sufficient to demonstrate the legislative

nature of EPA’s regulation. Congress defined the § 207(c) obli-

gation to remedy nonconforming vehicles by explicit reference

to the 5 year/50,000 mile useful life during which a vehicle must

conform with emissions standards. GM argued below, there-

fore, that a manufacturer is not required to remedy a vehicle

after its useful life has ended. EPA’s argument focused on the

fact that the statute requires that a recall notice be given to the

owners of an entire class of vehicles. Because notice is class-

wide, EPA argued that every vehicle in the class which cannot

be shown to have met the standards during its useful life must

be repaired on recall regardless of age or mileage. The parties

and the judges on the Court of Appeals all thought the lan-

guage of the statute was clear on its face—but each “plain”

meaning was markedly different.””

*’ Judge Bazelon concluded for the panel majority and the en banc dissent

that a manufacturer's liability for repair of a vehicle ended with its useful life.

but acknowledged the possibility that EPA might adopt legislative regula-

tions directed explicitly at delays in recall proceedings. App. B-1; App. A-24.

Judge Wilkey believed that, properly interpreted, § 207(c) limits liability to

vehicles still within their useful life at the time that a recall notice is given. He

suggested that EPA might adopt by appropriate legislative regulation a

mechanism for determining whether a vehicle was beyond useful life at that

date. App. B-43. Judge Wald’s panel dissent and en banc majority opinion

agreed with EPA's interpretation. App. B-47; App. A-1.

17

GM contends that the only passage in the Act’s legislative

history bearing on the choice among these constructions of the

repair obligation precludes EPA’s open-ended construction.

Commenting on the Senate bill provision that became § 207(c),

the Senate Committee on Public Works explained that a manu-

facturer would not be required to repair a vehicle which had

passed the 50,000 mile limit:

“The 50,000-mile period can be assumed to be 4 to 5 years

and the manufacturer should be ex to notify any

owner of a vehicle that is five years old or less as to failure

to continue to perform to the standard. A decision not to

require the manufacturer to repair the vehicle could be

made after notice and after finding that the vehicle had

exceeded the 50,000 mile warranty period.” S. Rep. No.

1196, 91st Cong., 2d Sess. 30 (1970), reprinted in 1 1970

—— History of the Clean Air Act at 431 (emphasis

The Court of Appeals, however, dismissed the quoted legisla-

tive history as “irrelevant * * * for the purposes of determining

the scope of the recall repair obligation,” on the ground that the

Senate Committee’s explanation related only to an earlier ver-

sion of § 207. App. A-20 (en banc majority).?!

The Court of Appeals’ analysis of the Senate Report, if

correct, means that there is no relevant legislative history to

disclose Congress’ intent on the particular question whether a

21 Judges Bazelon, Tamm and Wilkey in dissent strongly disputed the

majority's rejection of this legislative history. App. A at 40-41. Moreover, on

October 26, 1984, in a different case, a D.C. Circuit panel ruled that the same

legislative history should guide the court’s interpretation of § 207(c)(1) be-

cause it dealt with a provision of the Senate bill “substantially the same as

what is before us.” Center For Auto Safety v. Ruckelshaus, 747 F.2d 1, 5. In

that same passage, the court noted that the Senate Committee reporting the

bill described this subsection as a “recall” provision. /d. at 5-6. Thus, in the

space of seven weeks, the D.C. Circuit characterized the same legislative

history inconsistently as “irrelevant” to the recall provisions of § 207(c) and as

primary authority for determining the meaning of that section.

18

vehicle subject to notification must be repaired even though it

has passed its useful life.2? Indeed, EPA’s own position in

promulgating the regulation was that “(t]he legislative history

of the Act offers little guidance” regarding the scope of the

remedy. 45 Fed. Reg. at 36397.

Accepting arguendo EPA’s characterization, the various for-

mulations of GM, EPA and the Court of Appeals judges merely

represent alternative resolutions of an issue not spoken to by

Congress. By rejecting other alternatives and adopting its own

approach, EPA necessarily has added substantive content to §

207(c)(1) and exercised delegated legislative rulemaking au-

thority. See Chevron v. NRDC, 1048. Ct. at 2782-83, 2793; see

also pages 13-14 supra. For as Judge Bazelon aptly explained

for the panel majority, “if the agency wishes to fill in interstices

created by [this] congressional failure * * * the proper re-

course is a legislative, not an interpretative, rule.” App. B-35.

2. EPA’s Regulation Conclusively Resolved Legislative

Policy Issues In Order To Expand The Scope Of The

Recall Program.

The agency “record” reveals, as the court below correctly

discerned, that EPA’s purported interpretative rule is predi-

cated on substantive policy determinations made by the agen-

cy, not Congress. When “interpretation” of the law depends

upon an agency’s choice among alternative enforcement

schemes for implementing a statute and reconciliation of

“competing views of the public interest,” the product of that

22 The court’s conclusion left only broad policy arguments and general

statements in the legislative history concerning the duty to notify owners of

potentially nonconforming vehicles as justifications for upholding EPA’s con-

struction that repair liability is unlimited. See App. A at 14-17, 20-22. But the

legislative history cited by the en banc majority merely confirms the statuto-

ry text requiring that all owners of vehicles in the class be notified. See page

16 supra; App. A-16. That legislative history says nothing about whether,

after the notification, the remedy must also be class-based, as EPA contends,

thus requiring repair of vehicles to which the § 202 standards no longer apply.

19

deliberation is a legislative regulation. See, e.g., Chevron v.

NRDC, 104 S. Ct. at 2793.

The D.C. Circuit pointedly emphasized the policy choices

motivating adoption of EPA’s regulation. The court’s rehearing

order specifically directed the parties to file supplementary

briefs focusing in part on:

“the comparative benefits or deficits of the remedial

schemes set forth in the EPA rule, and Judge Wilkey’s and

Judge Bazelon’s panel opinions, in light of the statutory

language and purpose.” Order, April 3, 1984. App. C-4.

Indeed, the en banc majority even grounded its decision on

respect for the policy choices the agency had made:

“the dissent’s extensive dicta, setting out what it dubs

‘some reasonable alternatives,’ see Diss. Op. at 20-24, is

particularly inappropriate in light of the Supreme Court’s

recent warning that reviewing courts should respect the

policy choices of administrative agencies. See Chevron,

slip op. at 27-28.” App. A-11 n.8.

The substantive policy determinations motivating EPA are

similarly revealed by the materials EPA prepared to support

its regulation. As a conclusion of general policy, EPA reasoned

that more vehicles would be repaired if manufacturers bore the

expense instead of car owners. App. H-4. EPA further con-

cluded that a repair obligation not limited to useful life would

add economic incentives for improved emissions control tech-

nology. App. H-7. Moreover, both the EPA staff memorandum

and the preamble to the regulation speculated that, absent the

requirement imposed by EPA’s new regulation, manufacturers

would benefit from delays in the administrative process. App.

H-7; App. E at 6-7.

For all these reasons, EPA chose a policy of overinclusion,

thereby enlarging the repair obligation beyond the statutory

useful life. See pages 20-21, 27-28 infra. In the agency’s view,

seconded by the Court of Appeals, the public would be “bene-

20

fitted” if vehicles “can be repaired to decrease their pollution

potential even after their useful lives have expired.” App. A-21.

But because EPA gave no notice and allowed no comment, the

record is devoid of evidence to support the conclusion that the

“benefits” of this policy choice outweighed the “deficits.”

The need for notice and comment to resolve these and other

policy questions is underscored by the fact that EPA’s initial

regulations implementing § 207(c)(1) were adopted by legisla-

tive rulemaking in 1974 after extensive public comments on

their impact. 39 Fed. Reg. 44375. The new regulation depends

every bit as much on substantive policy choices as the regula-

tions it extended and, being legislative, cannot be adopted

without notice and comment.

3. EPA’s Regulation Has A Substantial Impact On Manu-

facturers’ Recall Obligations.

The actual and intended impact of EPA's regulation is to

impose substantial new obligations on vehicle manufacturers.

The regulation mandates that every remedial plan “shall pro-

vide” for repair of vehicles “regardless of their age or mileage.”

App. E-9. By its own terms, the regulation is prescriptive in

character and comparable in its impact to numerous other

recall requirements of 40 C.F.R. § 85.1803(a).

EPA’s regulation avowedly operates to increase substan-

tially the number of vehicles a manufacturer must repair in a

recall. See pages 27-28 infra. But beyond its intended effect,

EPA’s new regulation will also force repair of vehicles that

complied with al! legal requirements throughout their useful

lives. While EPA disclaims any intention of requiring manufac-

turers to repair vehicles which, although part of a recall class,

did not experience a nonconformity during their useful lives,

see 45 Fed. Reg. 36391. 36397 n.2 (1980), App. E-4 n.2, this

apparent concession is il isory. The manufacturer faces a near-

ly impossible burden ‘a attempting to prove that an older

vehicle, nonconforming when presented for repair, first exhib-

ited the nonconformity after its useful life had passed. These

21

burdens will be especially substantial whenever a recall occurs

late in the life of a class and many vehicles are past 50,000

miles.74

If any doubt remained, the threat of sanctions for omitting

the new provision from a remedial plan proves the regulation’s

substantial impact. Nothing could state that impact more

plainly than EPA’s warning to GM that failure to include the

new provision “can potentially subject GM to fines of up to

$10,000 per vehicle.” App. F-4. See M. Warren, supra note 9, at

371-72 (relying on the Final Report of the Attorney General’s

Committee on Administrative Procedure). The same intended

impact on all manufacturers can be seen more broadly in EPA’s

characterization of the new requirement as a “nationally ap-

plicable regulation.” By this designation, EPA explicitly in-

voked § 307(b) of the Clean Air Act to make the regulation

permanently enforceable and immune from subsequent chal-

lenge. App. E-7.

II. GUIDANCE FROM THIS COURT IS NEEDED TO RE-

SOLVE CONFUSION IN THE COURTS OF APPEALS

OVER THE PROPER APPLICATION OF CHEVRON.

Having wrongly classified the challenged regulation as inter-

pretative, the Court of Appeals then committed an equally

fundamental error by applying an incorrect standard of judicial

review. Specifically, the court below upheld EPA's regulation

by extending to it the highly deferential standard of review for

legislative regulations announced by this Court in Chevron v.

NRDC, 1048S. Ct. 2778 (1984). This second error independent-

ly warrants the exercise of this Court’s jurisdiction.

23 The regulation contains no time limit for EPA’s determination of noncon-

formity, although EPA's preamble stated that the determination could be

made only when at least some vehicles in a class had not passed 5 years or

50,000 miles. Compare App. E at 3-4 with 40 C.F_R. § 85.1803 Appendix A.

In any event, this “limit” does not alleviate the nearly insurmountable burden

of proof discussed in the text.

22

A. The D.C. Circuit Improperly Applied The Chevron

Standard Of Review To A Regulation That It Charac-

terized As Interpretative.

Chevron held that in reviewing regulations adopted in the

exercise of delegated legislative authority, courts must not

disturb the agency’s “‘accomodativn of conflicting policies’”

provided the regulation “is based on a permissible construction

of the statute.” Jd. at 2782, 2783.24 In Chevron, EPA had

conducted notice and comment rulemaking to define the term

“stationary source” in order to fill a gap left by Congress in the

Clean Air Act’s nonattainment provisions. In recognition of the

agency’s authority to formulate policy in implementing the

statute, this Court held that the agency’s choice of the “bubble”

concept was controlling. By its terms, Chevron mandates an

especially deferential level of review for all policy-based, or

legislative, regulations.

The Chevron standard contrasts both in its mandatory appli-

cation and its level of deference with the standard traditionally

applicable for the review of interpretative rules. Those rules

have been accorded varying degrees of deference, depending

upon their ability to persuade the judiciary in its role as the

exclusive arbiter of statutory interpretation. As Justice Jack-

son explained for the Court in Skidmore v. Swift & Co., 323

U.S. 134, 140 (1944):

“(Tthe rulings, interpretations and opinions of the Admin-

istrator [are] not controlling upon the courts by reason of

their authority, [but] do constitute a body of experience

and informed judgment to which courts and litigants may

properly resort for guidance. The weight of such a judg-

ment in a particular case will depend upon the areust-

*4 This holding elaborated the meaning in this context of the familiar

“arbitrary and capricious” standard prescribed for notice and comment

rulemaking by both the Administrative Procedure Act, 5 U.S.C. § 706(2)(A),

and § 307(d)(9) of the Clean Air Act.

23

ness evident in its consideration, the validity of its reason-

ing, its consistency with earlier and later pronounce-

ments, and all those factors which give it power to

persuade, if lacking power to control.”

Unlike the Chevron standard for legislative rules, the Skid-

more analysis dictates that in many cases an agency’s inter-

pretative rule deserves little deference or none at all. General

Electric Co. v. Gilbert, 429 U.S. 125, 141-143 (1976); Frank

Diehl Ferms v. Secretary of Labor, 696 F.2d 1325, 1329-31 (11th

Cir. 1983); 2 K. Davis, Administrative Law Treatise, § 7:13 (2d

ed. 1979 & Supp. 1982).°°

Despite holding that EPA’s rule was interpretative, the

court below departed from the Skidmore analysis. Instead, the

court began its review of EPA’s “interpretative rule” by stating

that in Chevron the Supreme Court had “recently outlined our

proper task in reviewing an administrative construction of a

statute that the agency administers.” App. A-11 (en banc ma-

jority). Emphasizing that standard of special deference, the

court held that EPA’s rule and the policy determinations under-

lying it “enjo[y] adequate support” to uphold EPA’s interpreta-

tion of § 207(c)(1). App. A-23.

The en banc dissent, by contrast, found the rule invalid when

measured by the standards set out by this Court in Skidmore.

App. A at 25-26, 46-47. Because EPA's rule did not represent a

longstanding or contemporaneous construction or reflect thor-

ough consideration, the dissent found that it deserved little

deference. Jd. at 26-27. Applying the Skidmore standard, the

dissent concluded that EPA’s regulation could not be sustained

as an interpretative rule. /d. at 43-47. Reflecting the pivotal

importance of Chevron to its decision, however, the en banc

25 See also Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 517 1.13

(1981); National Distributing Co. v. United States Treasury Department,

626 F.2d 997, 1019(D.C. Cir. 1980); Daughters of Miriam Center for the Aged

v. Mathews, 590 F.2d 1250, 1258-59 (3d Cir. 1978); General Electric Co. v.

OSHA Comm'n, 583 F.2d 61, 64 (2d Cir. 1978).

24

majority rejected the dissent’s Skidmore analysis as conflicting

with Chevron and failing to “respect [EPA's] policy choices.”

App. A at 11-12 n.8.

In so holding, the en banc majority improperly assumed that

this Court intended Chevron to overrule sub silentio the tradi-

tional Skidmore standard of review for interpretative rules.

Although not explicitly addressed in Chevron, the highly def-

erential standard articulated there cannot have been meant to

extend to interpretative regulations. The bubble concept reg-

ulation challenged in Chevron had been promulgated following

extensive notice and comment proceedings. 104 8. Ct. at

2787-90. Before deferring to the agency's policy choices, this

Court first concluded that Congress had not expressed any

“actual intent,” thereby logically excluding from its analysis

rules that are interpretative in character. /d. at 2781-82 & n.9;

see pages 13-14 supra.

Throughout, this Court’s opinion in Chevron emphasized the

agency's delegated authority to reconcile “conflicting policies,”

which depends upon consideration of “policy arguments * * *

more properly addressed to legislators or administrators, not

to judges.” Jd. at 2783, 2793. Such “competing views of the

public interest” can only be resolved, after notice and comment

procedures afford the public an opportunity to be heard,

through legislative rulemaking. See page 14 supra.

The D.C. Circuit’s extension of Chevron to interpretative

rules thus destroys the longstanding correlation between pro-

cedures for adopting regulations and the standards for judicial

review of those regulations. Legislative regulations are given a

high level of deference because they are adopted pursuant to

notice and comment procedures that allow public participation

to inform the agency's judgment. Interpretative rules, adopted

without notice and comment rulemaking, receive less defer-

ence with the judiciary remaining the arbiter of statutory

interpretation. Bethlehem Steel Corp. v. Gorsuch, 742 F.2d

1028, 1036 (7th Cir. 1984) (“the broad deference that reviewing

25

courts must give” under Chevron “makes it particularly impor-

tant” that proper procedures be followed).°6 The D.C. Circuit's

decision upsets this balance by allowing an agency’s regulation

implementing substantial policy determinations to be treated

as interpretative and hence exempt from procedural safe-

guards while, at the same time, according it the high level of

deference reserved for rules adopted with the benefit of public

comment.

B. The Decision Below Conflicts With Other Circuits’

Decisions As To The Applicability Of Chevron.

Even without a conflict among the circuits, the D.C. Cir-

cuit’s extension of Chevron would be sufficiently important to

merit this Court’s review by certiorari. The decision here to

apply the Chevron standard to interpretative rules was ren-

dered by the Court of Appeals en banc and thus will govern

that court’s review of interpretative rules in all future case:.

Not only does the D.C. Circuit receive the vast majority of

petitions for review of agency regulations, but under the Clean

Air Act and many other statutes, it is the only circuit where

those regulations may be reviewed. Section 307(b). See Ver-

mont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519,

535-37 n.14 (1978). In addition, because of the D.C. Circuit's

preeminence in deciding issues of administrative law, its hold-

ing is likely to influence the decisions of other circuits.7*

“6 See also cases cited at page 23 and n.25 supra. The more rigorous

judicial scrutiny for interpretative regulations was one of the factors cited for

exempting them from the general notice and comment requirements of

rulemaking. See Legislative History of the APA, 8. Doc. 248, 79th Cong... 2d

Sess. 18 (1946).

27 Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. at 535-37 n.14

(the decision by the D.C. Circuit “in this case will serve as precedent for

many more proceedings for judicial review of agency actions than would the

decision of another Court of Appeals”).

26

Although Chevron was decided just last Term, the Courts of

Appeals already are split over whether it applies to inter-

pretative rules. The Ninth Circuit appears recently to have

joined the court below in saying that Chevron applied to a

regulation treated procedurally as interpretative.°> Alcaraz v.

Block, 746 F.2d 593, 606 (1984).

By contrast, the First and Second Circuits have declined to

extend Chevron to interpretative rules. Thus, in Capitano v.

Secretary of Health & Human Services, 732 F.2d 1066, 1076

(1984), the Second Circuit rejected the agency’s argument that

a Social Security Ruling, promulgated without notice and com-

ment, should be given “authoritative effect” under Chevron.

The court held that the highly deferential Chevron standard of

review applies only to legislative, not interpretative, regula-

tions. Similarly, the First Circuit has held in New England

Telephone & Telegraph Co. v. Public Utilities Comm’n, 742

F.2d 1, 11 (1984), that Chevron is limited to determinations

reflecting “agency policy,” and does not apply to issues of

statutory interpretation reserved to the judiciary.*°

Accordingly, both the significance of the lower court's exten-

sion of Chevron to interpretative rules and the conflict among

circuits as to the applicability of Chevron require plenary reso-

lution of the issue by this Court.

28 See also Livermore v. Heckler, 743 F.2d 1396, 1408 (9th Cir. 1984)(Sneed,

J., dissenting) (relying on Chevron in connection with review of a regulation

interpretative in nature).

29 Intertwined with this dispute is the related question raised by the D.C.

Circuit and the First Circuit whether the appropriate standard of judicial

review, under Chevron, “varies to some degree dependent on whether the

statute's delegation of gap filling authority is explicit or implicit.” Rettig v.

Pension Benefit Guaranty Corp., 744 F.2d 138, 151 (D.C. Cir. 1984). See

Mayburg v. Secretary of Health & Human Services, 740 F.2d 100, 106 (1st

Cir. 1984).

27

I1l. THE COURT OF APPEALS’ AFFIRMANCE OF

EPA’S REGULATION HAS FAR-REACHING AND

SEVERE IMPLICATIONS FOR VEHICLE MANU-

FACTURERS AND ALL OTHER PERSONS SUB-

JECT TO ADMINISTRATIVE REGULATION.

The agency's “interpretative” regulation, if allowed to stand,

will have far-reaching and extraordinarily costly consequences

for vehicle manufacturers, none of whom was allowed to com-

ment on its rationale and impact. All motor vehicles sold in the

United States since 1970 are subject to the Clean Air Act

emissions standards enforced by EPA through its compliance

programs. Emissions standards have become progressively

more stringent, requiring the development and application of

increasingly complex technology designed to achieve compli-

ance with the standards throughout the vehicles’ useful lives. 2°

The agency's new regulation significantly expands manufac-

turers’ obligations and liability under this program. Over 22

million vehicles have been recalled to remedy emissions prob-

lems since the early 1970's, either voluntarily by manufactur-

ers or by EPA order. Moreover, the rate of emissions recalls has

increased since 1980, with annual recall totals escalating from

837,000 in 1979 to more than 3 million in 1983.3! EPA's regula-

tion, by eliminating the “useful life” limitation on the repair

obligation, will increase dramatically the number of vehicles

eligible for repair in these recalls. In the Cadillac recall alone,

%” The tightening of emissions standards has required reductions for 1984

model year vehicles of 95% for hydrocarbons, 96% for carbon monoxide, and

77% for nitrogen oxides, since the standards first became effective. See 40

C.F.LR. § 86.084-8 (1984); “Compilation of Air Pollutant Emissions Factors:

Highway Mobile Sources,” EPA 460/3-81-005, Tables 1.1.2A. 1.1.2B. 1.1.2C

(March 1981).

"t See May 9, 1980 EPA Staff Memorandum, Attachment 7. Even greater

emphasis on recall enforcement measures, including increased monitoring

and testing, is planned for the future. See generally EPA, Office of the

Comptroller, “Summary of the 1985 Budget,” at 17, 19 (January 1984).

28

for example, GM estimated in 1980 that the new requirement

would increase fourfold the number of vehicles to be repaired at

its expense, nearly 170,000 more vehicles than the statute

requires. Ct. Appeals Joint App. at 257-58.

Important as this case is, the implications of the decision

below extend far beyond the motor vehicle industry. The legis-

lative-interpretative distinction arises in connection with hun-

dreds of regulations each year. Although the classification may

be straightforward in some instances, for many others it de-

pends upon the test applied. When the “interpretative” label is

wrongly assigned, all interested parties, ranging from busi-

nesses to the disadvantaged, lose the opportunity to be heard

in the rulemaking process.

As shown by a number of leading cases, agencies have in-

voked the “interpretative” rule exception for regulations that

sought to alter the standards to qualify for food stamps.**

eliminate IRS requirements that determine whether hospitals

must provide medical servic es free or at reduced cost for those

unable to pay,*” alter eligibility for AF DC benefits, revise the

standards which govern whether non-resident aliens may en-

ter and obtain employment in the United States,* change

markedly the conditions for approval of new drug products,

and eliminate variance provisions from implementation plans

under the Clean Air Act.*”7 Notwithstanding the nature of

32 Compare Levesque v. Block, 723 F.2d 175 (1st Cir. 1983), with Alcaraz v.

Block, 746 F.2d 593 (9th Cir. 1984).

*3 Eastern Kentucky Welfare Rights Organization v. Simon, 506 F.2d 1278

(D.C. Cir. 1974).

* Allen v. Bergland, 661 F.2d 1001 (4th Cir. 1981).

% Lewis-Mota v. Secretary of Labor, 469 F.2d 478 (2d Cir. 1972).

% Pharmaceutical Manufacturers Ass'n v. Finch, 307 F. Supp. 858 (D.

Del. 1970).

*7 Detroit Edison Co. v. EPA, 496 F.2d 244 (6th Cir. 1974).

29

these agency actions and the severity of the consequences for

those affected, the decision below would allow such regulations

to be adopted without notice and comment and then to be

upheld on the merits based on deference to the agencies’ policy

choices. Only this Court's guidance can reconcile the conflicting

approaches among the Courts of Appeals and maintain ad-

herence to the procedural safeguards that should be followed

when agencies engage in legislative decisionmaking having

such sweeping repercussions for the public.

CONCLUSION

For the foregoing reasons, a writ of certiorari should issue to

review the judgment and opinion of the Court of Appeals for

the District of Columbia Circuit.

William L. Weber, Jr.

George F. Ball

Thomas L. Arnett

GENERAL Morors

CORPORATION

3044 West Grand Blvd.

Detroit, Michigan 48202

(313) 556-4009

Attorneys for Petitioner

General Motors Corporation

Dated: January 7, 1985

Respectfully submitted,

Theodore Souris

James A. Smith

Terrence B. Larkin

Robert M. Spence

BopMAN, LONGLEY &

DAHLING

34th Floor

100 Renaissance Center

Detroit, Michigan 48243

(313) 259-7777

Edward W. Warren

(Counsel of Record)

David G. Norrell

KirnKLAND & ELLIs

655 Fifteenth Street, N.W.

Washington, D.C. 20005

(202) 879-5018